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Plant Impact's sales growth stalls - for now

Sales growth stalled at Plant Impact in the latest quarter, but the crop enhancement company signalled "modest growth" in Europe ahead, and "good orders" for the late-2015 Brazilian soybean season.

The London-listed group – whose products aim to enhance crop yields through measures such as promoting resistance to infections - said that sales for the February-to-April period, at £600,000, were in line with those a year ago, representing a slowdown in its performance.

In the August-to-January period, the first half of the group's financial year, it unveiled a doubling in sales, to £2.50m.

However, Plant Impact said that despite the stagnation in a relatively unimportant quarter for trading, its results for the full financial year, which ends next month, will come in "in line with expectations".

With broker Peel Hunt foreseeing revenues for the full year coming in at £4.5m, up some 70% year on year, Plant Impact's statement implies revenues in the May-to-July period growing by some 75% to £1.4m.

'Good orders'

The group forecast "modest growth in Europe through the balance of the financial year".

And, for 2015-16, it forecast "good orders" for the Brazilian soybean season, for which sowings will start in September.

The company last year signed a deal with Bayer Cropscience, the German agrichemicals business, over marketing Plant Impact's Veritas product, which improves soy plants' pod counts and grain-filling performance.

Bayer Cropscience, which in February agreed an additional tie-up with Plant Impact, is particularly strong in Brazilian soybeans in fungicides, boasting a 25% market share, led by its Fox product.

Market reaction

Plant Impact broke into the black in the August-to-January period, with earnings of £205,000 compared with a loss of £508,000 a year before, although it is not expected to maintain that performance for the full financial year.

Peel Hunt foresees a full-year loss of £0.60 per share, with the company breaking into a small full-year profit in 2016.

The broker on Wednesday kept a "buy" rating on Plant Impact shares, and a price target of 70p.

"Plant Impact's technology has demonstrated material improvement to crop production and the Bayer deal provides an opportunity to build a material revenue stream in a key crop in a large market," said Peel Hunt analyst Charles Hall.

The shares eased 1.2% to 64.85p in lunchtime deals in London, but remain up 88% so far in 2015.

Faced with mounting concerns over labour shortages and fears they may not be able to fulfil retailer contracts, some British growers have sought to cut ties with UK supermarkets in favour of companies elsewhere in Europe.

Manufacturers of crop protection products are stockpiling agrochemicals in warehouses in a bid to keep input costs down for farmers after Brexit, according to the chief executive of the Crop Protection Association, Sarah Mukherjee.